China Continues to Prop Up its Ailing Factories, Adding to Global Glut

China’s continuing aid for unneeded factories is triggering a rise in trade disputes and protectionist sentiment

The Wall Street Journal
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May 10, 2016—China is doubling down on efforts to keep unprofitable factories afloat despite, for years, pledging to curb excess capacity, adding to a glut of basic materials flooding the global economy.

The country’s overproduction of steel, aluminum, diesel and other industrial goods has driven down prices and crippled competitors, leading to thousands of lost jobs in the U.S. and elsewhere.

China’s continuing aid for unneeded factories is triggering a sharp rise in trade disputes and protectionist sentiment, especially in the U.S., where trade has emerged as one of the pivotal issues in the U.S. presidential election.

According to a Wall Street Journal analysis of Chinese public companies, Chinese government support includes billions of dollars in cash assistance, subsidized electricity and other benefits to companies. Recipients include steelmakers, coal miners, solar-panel manufacturers and other producers of other goods, including copper and chemicals.

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